In Budget Crisis, Some Easy Targets For Defense Cuts

Defense Secretary Leon Panetta testifies on Capitol Hill on Nov. 15. Debate over Pentagon spending cuts is heating up as a bipartisan congressional panel tries to come up with a plan to cut the federal deficit.

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Originally published on November 20, 2011 8:45 am

The congressional supercommittee has only a few days left to come up with a plan to cut $1.2 trillion from the federal deficit. One of the areas on the chopping block is the nation's defense budget.

Pentagon officials are pushing back against cutting any more beyond the $450 billion they've already been asked to make, but at half the federal government's entire discretionary budget — and growing — the defense budget is an obvious place to keep cutting.

As the officials consider what has to go, says Todd Harrison, a senior fellow at the Center for Strategic and Budgetary Assessments, some cuts may bleed less than others.

A Growing Problem

When including war funding, the Department of Defense grew by more than 70 percent over the past decade, Harrison says. And even excluding war funding, the budget still grew by nearly 40 percent.

The main reason for the increase isn't the number of active duty officers — which remained about the same over the past decade — but skyrocketing personnel costs, mainly incentives to keep service members from quitting during wartime. Congress added pay raises for troops every year and the Pentagon keeps paying more for health care and pensions.

"So as a result, the cost per person in the military increased by 46 percent in real terms over the past decade," Harrison says.

The Pentagon has already been asked to cut more than $450 billion from its budget, but if the supercommittee fails to make a deal, then automatic defense cuts kick in — up to an additional $600 billion. Even if there is a deal, the Pentagon could face a couple of hundred billion more in cuts.

War Funding

A big part of the budget where there might be potential savings is war funding. The war in Iraq is drawing down by the end of 2011; the war in Afghanistan, by 2014. But Harrison says the savings are all about the baseline being used for comparison.

A baseline — basically, a starting point — assumes that the same amount of money will be spent every year. For example, last year, the U.S. spent more than $150 billion on the wars in Iraq and Afghanistan. That amount over 10 years gives you a projected cost of $1.6 trillion. But as the wars wind down, the costs will, too.

"War funding is projected to drop to $118 billion in [fiscal year 2012] and it will continue dropping in [fiscal year 2013] and beyond," Harrison says. "So in reality, we're not going to spend $1.6 trillion on the wars over the next decade. We're more likely to spend $300 billion or $400 billion."

When people say war funding is an area in which savings can be expected, Harrison says, laughing, it's "a gimmick because it's not real savings."

Weapons Programs

When it comes to the U.S. weapons programs and the number of planes, ships and tanks it acquires, Harrison says it's an attractive target when trying to find budget savings quickly and he believes the weapons-acquisition programs are going to bear the brunt of budget cuts.

But he says that doesn't make it the smartest place to cut. He says once building stops in some sectors of the defense industrial base, it's hard to jump-start them again.

"No private companies are buying nuclear-powered submarines or stealthy fighter jets," Harrison says. "So if the [Department of Defense] does not continue some level of steady funding for these industries, free-market forces will just eliminate them."

So, if all the savings can't come from ending the wars or cutting weapons purchases, where are the savings? Harrison points to the issue that inflated the defense budget in the first place: personnel.

Secretary of Defense Leon Panetta has said military health care premiums could go up and salaries may get scaled back. But Harrison says the military has to think bigger — anticipate the threats 10, 20 years down the line. Only then can the Pentagon decide what it can cut now and what it can't.

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LINDA WERTHEIMER, HOST:

NPR national security correspondent Rachel Martin has been looking into one part of the federal deficit math - the defense budget. She has this report.

RACHEL MARTIN, BYLINE: The Pentagon budget is complicated, to say the least. So, I sought out some help from an expert guide. Hi, Todd. Can you hear me?

TODD HARRISON: Yes.

MARTIN: This is Todd Harrison.

HARRISON: I'm a senior fellow at the Center for Strategic and Budgetary Assessments.

MARTIN: Which means he knows a whole lot about the U.S. defense budget. I started with a big basic question: Why is the defense budget such an easy target when it comes to cutting the deficit. He said, first off, the defense budget makes up half of the entire discretionary budget for the federal government, so it's always a target. The second reason is that the budget's not just big, it's growing.

HARRISON: The DOD budget grew, including war funding, by over 70 percent over the past decade. Even if you exclude war funding, it still grew by close to 40 percent.

MARTIN: Why?

HARRISON: So, I looked at this in my last budget analysis. And over the past decade, the number of people in the military in active duty actually remained about the same.

MARTIN: Harrison says what happened is that personnel costs skyrocketed, mainly incentives to keep service members from quitting during wartime. Congress added pay raises for troops every year and the Pentagon keeps paying more for health care and pensions.

HARRISON: So, as a result, the cost per person in the military increased by 46 percent in real terms over the past decade.

MARTIN: Now, the Pentagon has already been asked to cut more than $450 billion from its budget, but if the supercommittee fails to make a deal, then automatic defense cuts kick in - up to another $600 billion. And even if there is a deal, the Pentagon could face another couple hundred billion in cuts. I asked Todd Harrison to give me his take on two big parts of the budget where there might be potential savings. First, that war funding he mentioned earlier. The war in Iraq is drawing down by the end of this year; the war in Afghanistan, by the year 2014. How much money does the United States save when those wars come to a close, if any?

HARRISON: So, it's all about what baseline you're comparing to.

MARTIN: A baseline - basically, a starting point - one that assumes that you're going to spend the same amount of money every year. For example, last year, the U.S. spent more than $150 billion on the wars in Iraq and Afghanistan. That amount over 10 years gives you a projected cost of $1.6 trillion. But as the wars wind down, the costs will, too.

HARRISON: War funding is projected to drop to $118 billion in FY12 and it will continue dropping in FY13 and beyond. So, in reality, we're not going to spend, you know, $1.6 trillion on the wars over the next decade. We're more likely to spend $300 billion or $400 billion.

MARTIN: So, when people say that's an area where we can count savings, that's legitimate?

HARRISON: How do I say this? It is a gimmick because it's not real savings.

HARRISON: Acquisition programs are an attractive target when you're trying to find budget savings, particularly when you need to find the savings quickly. So, I suspect DOD's acquisition programs are going to bear the brunt of the budget cuts.

MARTIN: But Harrison says that doesn't make it the smartest place to cut. He says once you stop building some sectors of the defense industrial base, it's hard to jump-start them again.

HARRISON: You know, no private companies are buying nuclear-powered submarines or stealthy fighter jets. And so, if DOD does not continue some level of steady funding for these industries, free-market forces will just eliminate them.

MARTIN: So, if all the savings can't come from ending the wars or cutting weapons purchases, where are the rest? Harrison points to the issue that inflated the defense budget in the first place: personnel. Secretary of Defense Leon Panetta has said military health care premiums could go up and salaries may get scaled back. But Harrison says the military has to think bigger - anticipate the threats 10, 20 years down the line. Only then can the Pentagon decide what it can cut now and what it can't. Rachel Martin, NPR News, Washington. Transcript provided by NPR, Copyright NPR.